The Hang Seng Index rose 1.8 per cent to close at 27,159.06, its highest level since August 1, as investors’ outlook on the US China trade war improved, prompting them to snap up banking and property stocks.
The gains in Hong Kong on Wednesday contrasted with the CSI 300, which tracks blue chips listed on Shenzhen and Shanghai bourse. It closed down 0.7 per cent at 3,930.1, while the Shanghai Composite Index finished down 0.4 per cent at 3,008.81.
China on Wednesday unveiled a list of 16 types of products that will be exempt from the first round of additional tariffs on US imports as the two sides prepare for trade talks in Washington next month.
The exemption will take effect next Tuesday and remain in place until September 16, 2020, the Customs Tariff Commission of the State Council said in a statement.
Helping to sooth investors’ concerns further, Hu Xijin, editor in chief of Global Times, a nationalistic state-run newspaper, tweeted that China would announce “important measures to ease the negative impact of the trade war”, adding that these will benefit “some companies from both China and the US”.
HSBC rose 3.1 per cent to HK$60.75, Hang Seng Bank gained 4.6 per cent to HK$179, and China Construction Bank climbed 2.8 per cent to HK$6.2. Bank of China (Hong Kong) gained 3.7 per cent at HK$28.3.
Alex Wong, a director at Ample Finance, said worry about the impact of the US China trade dispute on the global economy has eased.
This has, in part, driven long-dated US treasury yields up. Those of the 10-year treasury rose to 1.706 per cent Tuesday, the highest level since August 9. Bond yields move inversely to price.
“This has, in part, led to a return of investors’ appetite towards banking stocks, which are cyclical stocks whose performances track closely to the economic cycles,” said Wong. Higher long-dated yields are often viewed as beneficial to banks, which make money by borrowing short term funding, such as deposits, to fund their longer term loans to customers.
Elsewhere, Wharf REIC rose 4.6 per cent to HK$45.9. Sun Hung Kai Properties rose 3.2 per cent, to HK$117.8.
Analysts said investors snapped up Hong Kong property stocks after some of them had racked up more than 10 per cent losses since June, when the now three-month long protests began over a now withdrawn extradition bill. The protests expanded to other grievances, including the high costs of even tiny flats.
In China, liquor and consumer stables led benchmarks lower.
“Now that Chinese and US officials have confirmed resumption of talks in Washington in October, investors are switching capital out of stocks which once were considered immune to the trade war, such as liquor and other domestic consumption stocks,” said Wong.
Index heavyweight Kweichow Moutai closed down 4.8 per cent at 1069.52 yuan, after Chinese media reported that the selling price for a bottle of the fiery liquor has dropped by 100 yuan in a single day in Hangzhou.
The news dragged down almost the entire sector, as its smaller Shenzhen-listed rivals fell hard. Wuliangye Yibin closed down by 5.82 per cent at 129.26 yuan. Luzhou Laojiao plunged 5.6 per cent to 87.51 yuan. Jiugui Liquor sank 5.3 per cent to 31.33 yuan.
Elsewhere, Foshan Haitian Flavouring fell 2.33 per cent to 109.8 yuan. Jiangsu Hengrui Medicine fell 3.1 per cent to 78.09 yuan. Muyuan Foods was down 4.4 per cent to 69.8 yuan.
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